Most companies in the Dominican Republic operate with commercial contracts that were never designed for the scenario they eventually face. Copied contracts, adapted from generic models or drafted without considering the specific Dominican legislation create a false sense of security that crumbles at the least expected moment.
What follows is a tour of the most frequent errors we have identified in our corporate practice, errors that do not seem serious when they are signed but become contingencies of millions when the conflict arrives.
Pitfall 1: Generic or missing dispute resolution clauses
Many commercial contracts in the DR do not clearly specify how disputes will be resolved, or include standard clauses that refer to “competent jurisdiction” without further detail. When the conflict arrives, the parties find themselves in a vacuum: no agreed mediation, no defined arbitration, no clear deadlines and no strategically chosen jurisdiction.
How to correct: Every relevant commercial contract should include a tiered dispute resolution clause: first direct negotiation with specific deadlines, then mediation before a designated entity, and finally arbitration or ordinary jurisdiction as appropriate to the nature of the transaction.
Mistake 2: Failure to define the obligations of each party with precision.
It sounds basic, but it is surprisingly common. Contracts where obligations are described in vague terms, where deliverables have no specifications, where deadlines are “reasonable” rather than concrete. This ambiguity is fertile ground for non-compliance.
How it is corrected: Each obligation must have: specific description of the deliverable or action, specific deadline in calendar days, explicit consequences of non-compliance, and mechanism for verification of compliance.
Mistake 3: Ignoring the implications of Law 479-08 on Commercial Companies.
Contracts between companies that do not consider the corporate structure of the parties may generate problems of capacity, representation or validity. Signing a contract with someone who does not have sufficient power to bind the company is more common than you might think.
How to correct: Before signing any relevant commercial contract, the legal existence of the counterparty, the validity of its administrative bodies, and that the signatory has sufficient and specific power to bind the company under the terms of the contract must be verified.
Mistake 4: Toothless confidentiality clauses
Most of the NDAs and confidentiality clauses circulating in the Dominican market are symbolic documents: they do not define what is confidential information with sufficient precision, do not establish proportional penalties, do not contemplate post-contractual duration, and do not provide for verification mechanisms.
How to correct: An effective confidentiality clause must define the protected information in detail, establish enforceable penalties (including liquid penalty clauses), establish explicit duration even after the termination of the relationship, and provide for precautionary measures in case of non-compliance.
Mistake 5: Not contemplating early termination scenarios
Business changes. What looks like a strategic alliance today may need to be completed in six months. Contracts that do not provide for clear exit mechanisms trap the parties in relationships that no longer work, or generate disorderly terminations that lead to litigation.
How to correct: Every contract must include clauses for ordinary termination (with notice), termination for cause (with defined grounds), and clear economic consequences of each exit scenario.
Contractual prevention: the most profitable investment
A well-structured contract is not a legal expense: it is the tool that keeps a business disagreement from turning into years of litigation. At Marinel Brea & Associates, every contract is reviewed from a perspective that combines corporate precision with the mindset of one who knows how documents are examined when things escalate. This double vision is what protects our clients.
Do your contracts really protect your company?
Request a strategic contract review.